Do I Need to Sign Up for MTD?

The £50,000 rule, gross vs profit, and what HMRC's auto-enrolment letters mean.

Gross income, not profit

This is the trap that catches most people. The £50,000 threshold uses your income before expenses:

• £55,000 turnover, £30,000 of costs, £25,000 profit — you are in scope (turnover over £50,000)
• £48,000 turnover — not in scope yet (threshold drops to £30,000 in April 2027)
• Employment income does not count towards the threshold — only self-employment and property income

The thresholds, year by year

HMRC is auto-enrolling people now

As of September 2026, HMRC has started automatically signing up sole traders and landlords who met the threshold but never registered, in stages, using 2024-25 return data. If you've had a letter about Making Tax Digital, assume you are in — you can check in your Government Gateway account.

You cannot submit quarterly updates until you are signed up, but being signed up alone triggers no obligations until your first quarterly period ends.

FAQs

I'm employed AND self-employed. Does my salary count?

No. Only self-employment and property income count towards the £50,000. Your PAYE salary is irrelevant to the threshold (though it affects your final tax bill).

I'm a sole trader AND a landlord. Does it all add up?

Yes — gross self-employment plus gross property income, together, against the threshold. And once in, you file two quarterly updates per quarter, one per income source.

What if my income drops below £50,000 this year?

Qualifying income is tested per tax year. If 2026-27 comes in under the threshold you can ask HMRC to leave the scheme — but while you're in it, the quarterly updates apply.

What do I have to do once I'm in?

Keep digital records (amount, date, category per transaction) and send a quarterly update through HMRC-recognised software. Our software guide covers the cheap options; the deadlines guide has every date.